Cal Expo is done as a location, but they still have a huge say in this process and could be a potential stumbling block in several respects. If they pull out, it’s over.
The convergence plan calls for: Expo goes to the developers, the city kicks in Natomas and railyard land, the state fair gets the Natomas location as well as the current arena – which is converted into an expo hall, and an arena is built downtown – which the city gets after 30 years. (Or at least that’s somewhat how the plan works) Q & R involved three parties that negotiated very hard - the Kings, Thomas, and the city (voter approval was needed, but they weren’t at the bargaining table) and the devil was in the details. Things started to break down/completely fell apart over issues like parking and the sphere of influence. Granted you could make the point there were larger flaws and voter approval was always unlikely, but you cannot deny there was at least the potential for a framework that would have provided significant benefits to all three parties that was never realized over negotiations on a few key items. In the end, those negotiations caused the Maloofs to pull out of the deal before the vote.
Now you’ve got 4 parties, more moving parts, and you need state approval. This is harder than the old Expo plan. The good news is it appears to have viable funding. But let’s look at some of the potential stumbling blocks. Right now, we shouldn’t be concerned about any particular issue but you should realize these stumbling blocks are very real. Again, it’s one thing to create an overall framework and another to hammer out the details.
City: Pretty simple here. They kick in some city land - their corner of the Natomas land and a portion of the railyard earmarked for a new transportation hub. In return the public gets a new arena, which the city owns after 30 years, plus all the development and economic benefits. That seems pretty simple and a no brainer. Of course issues like the balance of the Kings loan and infrastructure costs – which crept into the last negotiation – could move back onto the table (right now they appear to be off) if funding/developer costs are a problem. As could, a sphere of influence. As could, city council politics.
Kings: They pay rent and get to play in a new facility. Compared to Q & R they get a lot less. I guess they are fine with that. It appears they will at least need to negotiate over things like parking revenues and rent. It’s unclear because we don’t have a complete framework, but it looks like the developer will be buying the Kings Natomas land and some of that money will pay off the loan. If so, the sale price could be a huge sticking point.
The developer – gets the Expo land to develop and an undetermined portion of the arena profits for 30 years. They have to pay for the arena, the Kings land in Natomas?, and then turn around and improve the land with at least some of the facilities for a new state fairground? Yikes! There is a lot of money to be made here, but to make that money and/or even make a project pencil out. They have to control costs. That primarily involves reducing and shifting cots, which all of the other parties may want/need to oppose. There are a lot of terms and issues to hammer out here.
The State Fair – Hey, remember we started here! On the surface it’s pretty simple. They’ve got an old location with poor facilities and – while they end up with a much smaller plot of land – they should/could end up with a better facility. That sounds pretty easy, but I know a lot of people that think this could be the weak link. So far, we’ve been told the plan calls for Arco to be renovated into a modern expo hall. Which would be great for the fair. Let’s assume that most of the parking lot stays parking and some is converted easily (some tree and barrier removal) for the rides. Also, we’ll plan on some relatively inexpensive structures on the city land (dirt) for livestock barns and a small rodeo ring. That seems very doable. Of course, nobody is talking about those last few items and the Expo board can’t finance them. They are way in the red and I wouldn’t bank on getting state dollars. But I’ll assume that gets done. The state fair gets good revenue from the concerts and halls just for vendors … right now, it’s unclear whether they will get the developer to construct those. The plan doesn’t seem to call for them building a completely new fairground. Maybe the Cal Expo board will be logical and say – we aren’t getting everything we want but there some very good things and we’ll try to finance what we need later. Then again, maybe they feel like they are giving up too much / are the stepchild in the deal. First, you need the board to approve the final deal. That vote will turn on what is best for the fair – not the city or Kings fans. Second, you need to get the state to approve the deal.
See it’s really easy! You just need four groups to hammer out a deal that involves over a billion dollars in assets, legislature approval, multiple land swaps, 30 year leases, and slicing up huge revenue streams. You’ve probably need to get that done in about a year. Nothing to it.
